[Heavy Industry ON] Once-Hot Korea-U.S. "Battery Alliance" Fades... EV Chill Triggers a "Decision to Part Ways"

Prolonged EV Demand Slump
Triggers Wave of North American Battery JV Breakups
Stellantis Weighs Liquidation,
GM Scraps Investment, Ford Splits Assets

The alliance between Korean battery companies and U.S. automakers, which was formed in the early 2020s under the banner of being "partners in the era of electric vehicles," is now wavering in the face of a cold spell in the EV market. As the slowdown in EV demand drags on, U.S. automakers are successively pulling out of battery joint ventures (JVs), leading to assessments that a readjustment of K-battery players' North American strategies has become inevitable.

According to the battery industry, Stellantis is reviewing the liquidation of StarPlus Energy, its battery joint venture with Samsung SDI established in Indiana, United States. Stellantis is said to have already made the decision to withdraw and is currently discussing with Samsung SDI the specific procedures and timetable for the liquidation. The plant was built in 2022, with each company contributing a 50% stake.

[Heavy Industry ON] Once-Hot Korea-U.S. "Battery Alliance" Fades... EV Chill Triggers a "Decision to Part Ways"

Samsung SDI-Stellantis logo. Provided by Samsung SDI

Stellantis' decision is seen as stemming from mounting investment burdens as EV sales have failed to grow as expected. On February 6, Stellantis revealed that its cumulative losses from EV-related businesses alone had reached 22 billion euros. The Chief Executive Officer (CEO) publicly announced a plan to refocus on internal combustion engine vehicles and stated that the company would scale back its EV business in the United States. It appears the company concluded that maintaining capital-intensive battery joint-venture plants would not be easy.

Stellantis is also effectively in the process of withdrawing from NextStar Energy, its joint venture with LG Energy Solution established in Canada, by unwinding its stake. As it cuts back its EV production plans, the company is simultaneously shifting its strategy toward downsizing its battery supply chain.

General Motors, a flagship player in the U.S. auto industry, is no exception. General Motors had planned to gradually expand its production capacity in the United States through Ultium Cells, its battery joint venture with LG Energy Solution, but it recently officially canceled plans to build a third plant. Due to slowing EV sales, stabilizing the utilization rates of the existing first and second plants has become the top priority. Since declaring that it would moderate the pace of its EV transition, the company has been adjusting its investment plans accordingly.

Ford is moving even faster. Ford has agreed to split the assets of BlueOval SK, its battery joint venture with SK On. The company was once regarded as a key pillar supporting Ford's North American EV strategy, but Ford has begun restructuring as it reduces its EV investment scale and pivots toward a strategy centered on hybrids and internal combustion engine vehicles. Analysts interpret this as a sign that short-term profitability has taken precedence over long-term plans to internalize battery production.

In this way, the "joint-plant-centered North American strategy" pursued by the three major Korean battery makers in partnership with U.S. automakers is entering a phase of full-scale reassessment. A structure that was built on the assumption of rapid EV market growth and backed by aggressive investment is now in a situation where its pace must be adjusted in light of the reality of weakening demand.

Battery companies are searching for alternatives. A representative option is converting their North American plants to produce batteries for energy storage systems (ESS). However, industry observers note that it will not be easy to improve earnings in the short term, as it will take time to modify production facilities and secure new customers.

Within the battery industry, there is a view that the EV chasm will not be bridged in a short period of time. Accordingly, analysts say that the future success or failure of North American operations will depend on how quickly companies can secure alternative markets such as ESS.